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If you are not planing to distribute your applet widely (e.g only using on local LAN) then you may create your own certificate using the jarsign tool. You will have to install the ceritficate manually on each machine where you want to use the applet. Following URL details the procedure:http://www.suitable.com

RSA certifcate does not need this manual installation hence preferred if you are distributing widely but cost money.

But in JRE 1.4 the security model has been modified slightly - it uses "policytool" that comes with JRE. I wrote few signed applets way back in 1999 using JDK 1.2 and everything worked but when I wanted to see its working few months back on JRE 1.4 it prompted with a msg saying "old security extension using browser certifcate is not supported ....see policytool...something like this ". I do not remember the msg very clearly but I did not try anything on 1.4.
Hope this helps.
Pankaj